James Delahunty
11 Jan 2011 23:21
After reaching a $65 million settlement with Facebook founder Mark Zuckerberg back in 2008, ConnectU founders Tyler and Cameron Winkelvoss are now appealing the settlement.
The twins agreed to a settlement in 2008 that got them $20 million in cash and $45 million in stock, valued at $36 per share. Now, the pair are alleging that they were misled about the real value of Facebook stock in 2008, and have brought the case to the Ninth Circuit Court of Appeals in San Francisco.
A skeptical three judge panel began considering today whether the Winkelvoss twins have a case. They scrutinized the argument put forward by the twins through attorney Jerome Falk. "The (ConnectU) founders are pretty smart people themselves, the twins also have a father from Wharton School who is very bright," Judge John Wallace said.
"If you have all these people to advise you, isn't it difficult to say this is one of those things where you were taken advantage of?"
Wallace was pointing out that the settlement was reached by teams of lawyers and a top mediator. The Winkelvoss brothers had valued the Facebook stock based on a news report that Microsoft had bought a small piece of the social networking site in a deal that valued the stock at around $36, and the company at $15 billion.
Falk argued that Facebook violated US securities laws by not disclosing that it had valued the stock at closer to $9 for stock options issued to employees. "This case is about whether sophisticated parties surrounded by a platoon of world-class lawyers can cancel a deal that is binding," Facebook attorney Joshua Rosenkranz countered.
"No one was misled here," he said. "The ConnectU founders struck a deal that made them very rich and is making them richer by the day. No one made them sign it."